U.S.-Iran war ‘tax’ begins to hit American businesses and consumers
Nick Friedman, co-founder of Tampa-based College Hunks Hauling Junk and Moving, says his business has been facing multiple headwinds. High mortgage rates have dampened the real estate market, while rising insurance premiums are eating into operating costs. Now there’s the U.S.-Iran war and a surge in diesel fuel prices that is eating into profit margins. Yet, he doesn’t feel like he can raise prices.
“We are in a bit of a Catch-22,” said Friedman. “Our fear would be if we start raising prices it will hurt our customers.”
Bigger companies, he says, can probably get away with adding fees. As rapidly rising fuel costs are cascading across the American economy, that is exactly what some are doing.
United Airlines and JetBlue both raised prices on baggage this week. Amazon announced a 3.5% “fuel surcharge” on sellers.
The war’s economic impact could get worse for Americans
Amazon is adding a fuel surcharge to its e-commerce deliveries. Mortgage rates have risen to their highest mark in seven months. And consumers may soon see higher prices for soda bottles and detergents.
These are all early indications of the Iran war’s impact on the U.S. economy. So far, the costs of the joint U.S.-Israeli military campaign have been modest, especially compared with the economic turmoil roiling Asia, and U.S. growth remains solid. On Friday, the Labor Department said employers added a robust 178,000 jobs in March.
But like thunderclaps that herald an advancing storm, rising energy bills, interest rates and supply shortfalls may be warnings of worse to come.
Americans, by a margin of 56 percent to 7 percent, expect the war to have a “mostly negative impact” on their personal financial situation, according to a March 31 Ipsos poll. A Middle East conflict that lasts for several more months would almost certainly spread higher prices and supply chain disruption beyond Asia and Europe to American shores.